Why more practices are giving physicians raises

After several years of not giving raises, things have turned around for Bender Medical Group, Inc., in Fort Collins, Colo.

John L. Bender, MD, MBA, the CEO of the physician-owned group, says his practice reviews physician salaries at the end of each year. It has given physicians raises since 2014, after several years of being flat. The average salary increase over the three-year period was around 16 percent for a full-time employed family physician.

Production was up, mostly as a result of implementing medical scribes to take notes while the physician talks with and treats the patient. “This boosted provider bonus payouts as revenues increased from team productivity,” Bender says.

But not all physicians in the group received raises. “Raises are still about recognizing what value a physician brings to the table and what they can negotiate,” Bender says. “It’s important for a physician to know their revenue numbers, and to also understand how he or she contributes to the organization’s overall efforts.”

Similarly, Shannon Davis, the office manager for Littlerock Family Medicine, a private practice in Tumwater, Wash., was able to give the entire team raises this year after a few years of not being able to due to limited resources.

“Staff members in our billing department worked hard to recoup as many outstanding payments as possible and chased denials from insurance companies, making raises possible,” she says.

These two practices reflect data from the 2018 Physicians Practice Staff Salary Survey, indicating that more practices plan to give raises beyond cost of living this year. According to the data, 42 percent said they plan on increasing annual salaries, up from 34 percent in 2017.

Competitive hiring environment

Phillip Miller, a vice president, with physician job search and staffing firm Merritt Hawkins and Staff Care can certainly attest to the competitive market for physicians.

“Over the past 30 years, a multi-billion dollar industry has grown up around physician recruitment and staffing,” he says. “Just about every hospital as well as larger medical groups have their own in-house physician recruiters and may also use outside recruiting firms.”

Bender can attest to this. “We saw increased marketplace pressures from two local health systems that heavily recruit family physicians, as well as a downturn in the availability of resident physicians to rotate through our clinic,” he says. “That compelled us to bargain harder to retain our current staff.”

Merritt Hawkins’ 2017 Survey of Final-Year Medical Residents indicates that 76 percent of physicians about to finish residency receive 50 or more recruitment offers during their training; 55percent receive more than 100 recruitment offers.

For this reason, paying higher salaries to retain physicians has become a priority for practices.

About 13 percent of primary care physicians relocate every year, according to the data firm SK&A. “Offering competitive compensation is one way to prevent physicians from exploring greener pastures,” Miller says.

Furthermore, a growing number of sites of service are vying for the same physicians—including hospitals and hospital systems, medical groups, urgent care centers, Federally Qualified Health Centers, retail clinics, and insurance companies.